The city of Duluth has been freed of debts incurred for the construction of a maintenance base for Northwest Airlines that could have approached $30 million, Mayor Herb Bergson said.
"This is a great day for Duluth," Bergson said Friday.
A bankruptcy judge in New York approved a settlement May 21 that would provide Minnesota with an equity stake in the reorganized Northwest Airlines in return for the state dropping its claim to a $40 million financial note it had held as collateral. The settlement became official this week after a 10-day comment period passed without any challenge.
The state quickly sold the equity stake in the Eagan-based carrier for 65 cents on the dollar, raising just enough money to cover all of the outstanding bonds on the now-empty maintenance base, said Rep. Jim Oberstar, D-Minn.
Without the deal, Duluth could have been forced by the state to pay off bonds that were used to finance the 189,000-square-foot maintenance facility.
"The financial obligation of those bonds would have hamstrung the city for years to come," the mayor said.
The Duluth Economic Development Authority will assume ownership of the maintenance base when the bonds are paid off, probably this month The next challenge, Bergson said, will be to find a new tenant for the building which has been idle since 2005.
(Copyright 2007 by The Associated Press. All Rights Reserved.)
